American Greetings Announces Acquisition of Assets of Clinton Cards
CLEVELAND, June 7, 2012 /PRNewswire-FirstCall/ -- American Greetings Corporation (NYSE: AM) today announced that it has acquired assets, through a subsidiary in the United Kingdom ("UK"), from Clinton Cards PLC and certain of its subsidiaries ("Clinton Cards").
Clinton Cards, one of the largest specialty retailers of greeting cards in the UK, had approximately 750 stores and annual revenues of approximately $600 million before being placed into administration on May 9, 2012. As previously announced, through its UK subsidiary, American Greetings had acquired the senior secured debt of Clinton Cards for approximately $56 million. The legacy Clinton Cards business has been an important customer to American Greetings' international business for approximately forty years, and is one of American Greetings' largest customers.
The acquisition includes approximately 400 stores and related overhead as well as the Clinton Cards and related brands, representing approximately $315 million in annual revenues, or approximately $265 million excluding revenues generated from its sale of American Greetings products. The final number of stores acquired will be dependent on negotiations with landlords at each respective location. The other stores, assets and liabilities not acquired by American Greetings remain part of the administration process under the direction of the administrators, partners of Zolfo Cooper LLP ("Zolfo Cooper"). It is anticipated that the remaining assets will be liquidated and proceeds will be used to repay Clinton Cards' creditors, including American Greetings. The administrators previously announced that they identified approximately 350 stores to be closed and were seeking concessions from certain creditors of Clinton Cards, particularly its landlords. The administrators conducted an auction of the remaining assets of the business that they believed constituted a viable ongoing business. American Greetings bid approximately $37 million for these remaining assets. The bid took the form of a "credit bid" which uses a portion of the outstanding senior secured debt owed to American Greetings by Clinton Cards to pay the purchase price for the assets. The approximately $19 million remaining senior secured debt held by American Greetings is expected to be substantially repaid through the liquidation process. However, it is possible that there may not be sufficient proceeds, net of administration costs, to cover the entire remaining $19 million investment. The liquidation process is expected to take approximately six to twelve months.
Chief Executive Officer Zev Weiss said, "We are pleased to welcome these stores, the Clinton Cards brand, and the approximately 4,500 employees as members of the American Greetings family. As mentioned before, we believe that properly managed, and with the appropriate capital structure, Clinton Cards can be both an important and profitable retailer in the specialty channel of distribution over the long term. The separation of the acquired assets and business from the legal entity in administration is an important first step of this process. We have also lined-up a leadership team to run the new UK subsidiary that has extensive specialty retail channel experience."
American Greetings expects to disclose additional information about the transaction with the Company's first quarter earnings release and conference call on June 28, 2012.
About American Greetings Corporation
For more than 100 years, American Greetings Corporation (NYSE: AM) has been a creator and manufacturer of innovative social expression products that assist consumers in enhancing their relationships to create happiness, laughter and love. The Company's major greeting card lines are American Greetings, Carlton Cards, Gibson, Recycled Paper Greetings and Papyrus, and other paper product offerings include DesignWare party goods and American Greetings and Plus Mark gift-packaging and boxed cards. American Greetings also has one of the largest collections of greetings on the Web, including greeting cards available at Cardstore.com and electronic greeting cards available at AmericanGreetings.com. In addition to its product lines, American Greetings creates and licenses popular character brands through the American Greetings Properties group. Headquartered in Cleveland, Ohio, American Greetings generates annual revenue of approximately $1.7 billion, and its products can be found in retail outlets worldwide. For more information on the Company, visit http://corporate.americangreetings.com.
Factors That May Affect Future Results
Certain statements in this release may constitute forward-looking statements within the meaning of the Federal securities laws. These statements can be identified by the fact that they do not relate strictly to historic or current facts. They use such words as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. These forward-looking statements are based on currently available information, but are subject to a variety of uncertainties, unknown risks and other factors concerning the Company's operations and business environment, which are difficult to predict and may be beyond the control of the Company. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company's future performance, include, but are not limited to, the following:
- the ability to successfully integrate Clinton Cards and achieve the anticipated revenue and operating profits;
- a weak retail environment and general economic conditions in the UK;
- the outcome of negotiations with landlords and the ultimate number of stores acquired; and
- the ability of the administrators to generate sufficient proceeds from the liquidation of the remaining Clinton Cards business to repay the remaining $19 million of secured debt owed to American Greetings.
In addition, this release contains time-sensitive information that reflects management's best analysis as of the date of this release; however the risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company believes to be immaterial also may adversely affect American Greetings. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have a material adverse effect on our business, financial condition and results of operations. American Greetings does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Further information concerning issues that could materially affect performance related to forward-looking statements can be found in the Company's periodic filings with the Securities and Exchange Commission, including the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended February 29, 2012.
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